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AbbVie Stock Price: Is It The Best Time to Capitalize on a Rally?

AbbVie stock price

AbbVie (NYSE: ABBV) stock price rallied steadily in the past four months on the back of Allergan acquisition. The shares grew to the highest level in the past eleven months. The recent upside momentum is also supported by robust financial numbers for the third quarter along with updated guidance for the full year.

The strategy of increasing cash returns year over year is adding to investor’s sentiments. However, value investors always like to sell the stocks when they reach fair value.

ABBV AbbVie Inc. daily Stock Chart

In the case of AbbVie, the shares are currently trading slightly below from 52-weeks high. Therefore, investors are wondering whether AbbVie stock price is presenting a perfect selling opportunity.

Future Fundamentals Suggest Further Upside for AbbVie Stock Price

Although ABBV share price rose 34% in the past three months, its future fundamentals are backing the gains. The drugmaker has successfully raised $30B through the sale of the largest block of bonds to fund its $83B Allergan acquisition.

The acquisition is likely to boost AbbVie’s revenue and earnings potential. In addition, the inclusion of Allergan would also enhance operational efficiencies and product portfolio. The acquisition is likely to close early next year.

The recent results also support ABBV share price gains. The company’s Q3 revenue increased 3% year over year, driven by growth in the Hematologic Oncology segment. Its non-GAAP earnings per share rose 9% to $2.33. The company remains firm on its strategy of returning cash to investors.

It offers one of the best dividend yields in the industry.  The company has recently raised the quarterly dividend by 10%. This represents the sixth consecutive year of a dividend increase.

Higher Guidance Could Help in Extending Momentum

The company has raised its full-year Non-GAAP diluted earnings per share forecast to $8.90 – 8.92 from $8.82 – 8.92. This indicates an increase of 39.1% at the midpoint from the past year.

Moreover, the company guides substantial revenue growth in fiscal 2020 amid Allergan acquisition. Thus, holding AbbVie stock price appears like a good strategy. Short term value investors can also take advantage of the recent share price rally.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.